Politicians and the business community must work together to determine Switzerland’s strategy and restore legal certainty around cross-border business matters to ensure the long-term future of the financial centre, said Dr Urs Zulauf, head of the strategic and central services division at FINMA, the Swiss regulator, at a media conference.

Alluding to Switzerland’s willingness, under pressure from the OECD, to provide international administrative assistance on tax evasion, and the disclosure of UBS client data, Dr Zulauf said foreign clients were now “uncertain” about Swiss institutions.

However he did not advocate creating further Swiss laws, saying: “[FINMA] believes it is fundamentally inappropriate to further increase the foreign legal risks by creating complementary Swiss risks. Those who are over-hasty in calling for new domestic criminal offences or an extension of documentary offences should bear this in mind.”

In contrast to this, the Swiss government has proposed changing the country’s tax laws to get rid of the distinction between tax evasion and tax fraud, The Times reported.

Individual firms need to focus on ensuring compliance with foreign authorities in target markets, said Dr Zulauf. He highlighted that it frequently makes a difference under local supervisory law how the advisor communicates with the client, for example if, and where, they meet them in person. He also noted that where clients are served by external asset managers, the legal risk remains with the custodian bank, and thus “a great deal of care” should be taken when selecting partners.

Compliant service models must be developed for each individual target market, said Dr Zulauf, and FINMA expects financial institutions engaged in cross-border private client business to apply this comprehensive risk analysis to their business model.

The regulator will soon review whether it needs to release a regulatory order on this, or whether it can issue concrete specifications on an informal basis.